Who's Going To Eat The Losses?

Tyler Durden's picture

Authored by Charles Hugh Smith via PeakProsperity.com,


Many more people need to understand what that word really means, and how it applies to pretty much everything in the current human living arrangement. Especially the so-called 'developed' nations.

Here’s the dictionary definition:

Let's take these three definitions one at a time.

First: our entire economic model, which dependent on borrowing at a faster rate than income (GDP) grows, is something that simply cannot be maintained at its current rate or level. Check.


Second: depleting species, soils and aquifers are all wildly unsustainable practices that are accelerating. Check.


Last (and most glaring of all): the world’s leadership (and we use that term very loosely) continues to insist on adhering to the indefensible idea that infinite growth on a finite planet is possible  Checkmate.

Said another way, the daily comforting stories we are told about how all of this somehow makes sense are just a load of nonsense. Each is entirely unsupportable by the evidence, facts and data.

What happens when a culture’s dominant narratives are not just unsatisfactory, but entirely unworkable? 

Well, for one thing, the younger generations that are being asked (goaded?) to step into an increasingly flawed future begin to resist. Which is completely understandable. They have nothing to gain if the status quo continues.

At the same time, the older generations mostly just settle into a stubborn insistence that everything will be fine if everyone will just do more of precisely what got us into the mess in the first place. Younger people should step up to make sure Medicare/Social Security/pensions remain fully funded, and buy the financial assets and homes of downsizing seniors at top dollar. The boomers have everything to lose if the status quo changes.

Why do I bother to tell you all this?  Why have I spent the last ten years of my life trying to alert the public of risks they keep telling me make them uncomfortable?  Because I care. Because I hope to help a few people preserve their hard-earned wealth. Possibly even save a few lives with this information. And, ultimately, to help people lead lives filled with greater connection, aliveness and joy.

The key to all of these better outcomes is having a clear-eyed view of "what is", and then being able to predict "what’s next". Which means that understanding is the first step. Informed action follows from that.

Mind The Gap

In the US, through selfish over-consumption, the baby boomer generation has screwed the prospects for following generations. It's now doing everything to deny and defend its extraordinarily self-serving and short-sighted decisions, and delay the repercussions for as long as possible.

For the record, I seriously doubt the current younger generations would have behaved any differently were we to teleport them back in time  The boomers came of age when net energy from oil was still climbing and that ‘taught’ them about ‘how the world worked.’  When you have abundant resources, especially high net energy oil, you can pretty much do anything you want.

But today?

Not so much. A BIG fallacy of the past is that wars lead to rapid economic expansion afterwards. A more correct version of this is that the destruction of war leads to rapid recovery and rebuilding ONLY IF you also have access to abundant high net energy oil. If you don't, wars only lead to destroyed economies.

Think of it this way: an 18-year-old who injures his knee has the resources of youth to help them recover completely. But an 80-year-old? Not so much.

This fallacy of thinking that we can just have another nice major war (North Korea?), or a few major hurricanes (Harvey, Irma and counting...), and then not only recover, but return better than ever is a dangerous delusion to hold. It's no different than our 80-year-old thinking that taking up downhill skateboarding would be a safe and sensible thing to do. 

Self-deception is a process of denying or rationalizing away the relevance, significance, or importance of opposing evidence and logical argument. Self-deception involves convincing oneself of a truth (or lack of truth) so that one does not reveal any self-knowledge of the deception.


The inter-generational resentment mentioned above is growing ever more extreme and it’s creating a significant social (and soon political) disturbance that will prove to be utterly disappointing for all. Already we see the signs in failing pensions having to cut benefits, young people opting out of such bulwarks of cultural stability as car ownership, marriage and having children.

If the DNC hadn’t straight up stolen the primary from Bernie Sanders, it’s quite possible that he’d have handily won the US presidential election and we’d already be feeling the effects of the political power of the next generation.

In this view, Trump is nothing more than the first (but not final) reflection of boomer denial backfiring badly. The sclerotic remnants of the past held fast and tried to jam Hillary down the throats of a very unenthusiastic electorate that long ago concluded that business-as-usual is literally a vision without a future. And so Hillary was rejected and Trump, the only alternative left standing, got the victory.

Who’s Going To Eat The Losses?

The US economic data to back up this decidedly dim view of things could not possibly be more robust and unassailable.

If we were allowed just one chart, just a single piece of data to back up this assertion, it would be this one:

The oft-cited and worried over ‘US federal debt’ of some $20 trillion is the lowest dark-blue shaded area on that chart .It’s not even 10% of the predicament the country faces

No country has ever dug out from under a debt + liability load anywhere close to that amount. It's just too big a hole to climb out of.

With GDP growth stubbornly anemic for going on 12 years now, and no fresh sources of high net energy to fund future GDP growth, we can say this very simply about the promises our politicians are soothingly singing to us:

Any thought that these promises will be kept is delusional.

They won’t be kept because they can’t be kept. It’s really no more complicated than that.

Only one question matters when presented with a chart like this: Who’s going to eat the losses?

The keepers of the status quo, such as Hillary and Trump and their cozy relationships with Goldman-Sachs, et al., want the answer to be ‘the taxpayers’ (and not ‘the banks’). But they'd never publicly admit to that. So they pretend that losses will never matter, and instead promise perpetual prosperity for all.

So people, companies, communities and the entire nation of the United States makes plans and investments as if the above chart didn't even exist.

This is no different than our 80-year-old refusing to draft a will because he simply can't face the reality that one day he'll need one. Such denial and self-delusion make a terrible strategy to live by.

The fact that you live in a world where the leaders of most countries are engaging in willful denial does not mean you have to be a victim to the consequences of their irrational delusion.

This is why having a clear-eyed view of the data, knowing your history, and forecasting the most likely outcomes are critical for positioning yourself for safety.

Those who do this empirically realize that the global economy is far more likely to contract, possibly viciously, before it expands. Given this, today's global equity prices and non-investment grade bonds are absolutely mis-priced for such an outcome -- instead they're practically priced for perfection, and thus due for a major correction.

Last week we issued a report warning of the multiplying number of important indicators signaling a coming market correction and economic recession.

*  *  *

In Part 2: How To Deal With Our Dangerous Markets And Failing Future, we explain why the fall from today's market highs will be so painful, and where today's concerned investor can look when seeking safe haven for their capital. We have the world's central banking cartel for our situation, who have -- for the third time in less than 20 years -- blown a gigantic bubble.  Or rather, have blown a nested set of bubbles (stocks, bonds, housing), each of which will help accelerate the popping the others when the time comes. As with a developing hurricane, the time to prepare yourself for these eventualities is well before they actual manifest.  Once they’ve arrived, your ability to respond and react will be hampered by the fact that your efforts will be accompanied by those of thousand and millions of other people. Don't be one of the panicked herd. Take prudent action today. Click here to read Part 2

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besnook's picture

planet of the apes is the logical conclusion.

hedgeless_horseman's picture


Mirror mirror on the wall, 

Who's left holding

The bag for all?

YUNOSELL's picture

how about the juice? They'll willingly share the debt burden

Mustafa Kemal's picture

"The taxpayer."

Its not that simple. When the pensions fail, depending on how much the taxpayers pay, the pensioners will lose.


Anyway, I looked for the answer in the article, but it wasnt there.

Oldwood's picture

So Bernie was to be our savior? I love how socialists always have the God damned solutions.

No doubt Bernie was robbed but only a full on idiot would believe HE, this ancient old Boomer socialst that can be bought for chump change, could fix anything. He could only precipitate an accelerated collapse, Venezuela as our template....cheap oil decimating what's left of their socialist paradise.

We are at this point, NOT because of cheap oil, but because of socialist policies of entitlement that combined with debt provide surrogate for actual jobs that our taxing, trade and environmental policies have murdered off. What is unsustainable is our dependence on debt to build a house of cards and foster a notion of entitlement that has created a society of future zombies, willing to consume all they find within reach without a moment's hesitancy our guilt.

Cheap oil? What about cheap labor, cheap imports, cheap credit and politicians purchased cheaply.every boomber I know personally WORKS, unlike so many younger people. I truly resent this old fuck casting derision on an entire generation simply because he feels personally guilty....or does he? He never seems to refer to himself in this group. Is he yet ANOTHER of our elites preaching down to his peers?

Consuelo's picture



Mirror-mirror on the wall, the same old re-hashed shit and no fun at all...

Sanity Bear's picture

we just had 8 years of that

dirtyfiles's picture

just go back to the gold standard and we can fix everything...simple as that

rf80412's picture

Only because those who hold gold will be forced to - horror of horrors - spend it.  Unless of course they're content to sit in their rooms orgasming themselves to death over their little (or not so little) hoards going from $1250 an ounce to $500,000 an ounce overnight.

More likely we'll see debt-based money come roaring back in the form of gold notes.  The issuers will be counting on the fact that few people are particularly interested in redeeming the notes, being as they are far more practical than particles of gold dust or coins worth a year's income.  Meanwhile those who are interested in redeeming them are likely to be hoarders, or hoping to displace existing issuers of debt, so many ingenious strategies will be developed to make sure the gold never leaves the vault: like a vault full of Good Delivery bars so that only quantities of notes equal in value to a multiple of Good Delivery bars can be redeemed.

Unless of course gold actually become far less valuable than the dreamers hope, because especially if gold is no longer priced in dollars, what's to stop people from somehow deciding that a fingernail-sized slip of gold in plastic is only "worth" something comparably insubstantial?

dirtyfiles's picture

well at some point in near future when we hit the financial wall we need to redefine value...how to reprice all this

Oldwood's picture

Our economic woes are not the fault of our currencies but of our government. If gold challenged our government dominance, it would be outlawed...or more likely taxed, every gold transaction taxed by some exorbitant amount to destroy it's effective value. Currency transactions between consumers might be possible but only after a complete governmental collapse. Do we REALLY think they will allow THAT to happen?

This is not about money, it's about power, control, and they have plenty of both to oppress us completely, if it comes to that.

It's not our financial system, it is our government and their growing "need" to demand our submission that drives our "problem".

JibjeResearch's picture

Gold standard

BAwahaha ahahahaha hahaha

Sy Kloine Bee's picture

The muppets will eat the losses.

Implied Violins's picture

I'll make the sacrifice and eat Michael Moore - unless there's a bigger loser out there.

CJgipper's picture

"There will be no losses"  - Plunge Protectoin Team

Midnight Rider's picture

"Until our owners are fully positioned to take maximum advantage of it". I'd say we're probably getting pretty close to that point. They've spent the entire year getting Joe Public to open brokerage accounts at a rate not seen since the top of the tech bubble. 

Kprime's picture

it ain't the boomers, it's the politicians.  until the general population understands this and until folks quit gunning down taxpayers and start gunning down politicians, nothing will change.  why do you think the founding fathers tried to protect our right to bear arms?  it wasn't for hunting animals and it wasn't for the times we got mad at each other.  it was for the day when the politicians began to steal our rights, our earnings and our futures.  that day has arrived.

JibjeResearch's picture

People need to realize that this is a 'CLASS WAR' ..

It's a war between the Smart and the Stupid.


Do you think the stupid will ever create wealth for them in old age?

Don't hate me when I say I despice stupid/moronic people.. and they deserve what is coming...

Sudden Debt's picture

Somebody talked to me about her pension prospects in 25 years from now...

I just laughed and said: "you really believe you'll see anything?"

no.... she said but in a way that she didn't really want to say it.

You think you'll see any of your pension savings? How much do you save for your pension? 100 euro's a month? That will be worthless and youl'll probably never see it. Whatever you pay goes straight to payments of those who paid in the past and now want it back.

he?... Really? 

Yep, do you believe that when they said that all the money was gone in 2008 that suddenly it all came back? Look arround you! All you see is grey old people!


People do realize they won't get a pension.

People DON'T realize that inflation will kick their ass and whatever they've got they'll need to survive when inflation bypasses their salary.



And people still compaire their shit and like to make fun of the fact that somebody else is worse off...

If you're drowning, the fact that everybody arround you is going under faster then you shouldn't give you hope....

And on their wy down they'll grab anything they can get their hands on hoping to get up even if only for a second.

ElTerco's picture

That's why you buy a farm in a cheap property tax state.

JibjeResearch's picture

I spoke to a teacher in California..., I felt like she didn't want to talk about it... when I mentioned Calpers..

Fantasy Free Economics's picture

People misunderstand what is going on. No one cares who eats the losses. This has nothing to do with right or wrong.


This is about getting while the getting is good. Eventually the American people will wake up to the fact that they are being fleeced. Everybody who can is getting all they can while the opportunity is still ongoing. When the country is trashed they will have already had their lunch and eaten it. Why even think about who eats the losses?



Oldwood's picture

It's musical chairs and we just don't realize that they keep playing the music louder while removing more and more chairs. When the music stops there is going to be a LOT of people without a seat and luck may player a bigger role than we like. Those playing the music will be secure, so don't worry about them.

lynnybee's picture

such a great question!  I, too, have been wondering (since 2009) WHO would eat WALL ST INVESTMENT BANK losses & kick out the corrupt private, for-profit Federal Reserve Bank.   WHO will eat the losses due to WALL ST thievery, looting, swindling, scamming & outright deception!!   

 reinstate Glass-Steagal & let the chips fall where they may.    & i want my grandparents gold coins back, the ones swindled from them in 1933; my rightful inheritance was swindled.

i'll go to my grave ranting.  wake me up when the swindlers are gone.


a post-cabal world is the end-game.


buzzsaw99's picture

morpheus meme time:

what if i told you

there will be no losses to eat?

buzzsaw99's picture

what if i told you

there never were any losses?

buzzsaw99's picture

what if i told you

losses are an artificial construct?

Jack's Raging Bile Duct's picture

Retail investors. I mean rubes. Failing to sucker those, then tax payers. Failing that, the plebeians will eat losses through more stagflation.

Dilluminati's picture

short sprint.. you heard it here first next couple days huge announcement data breach.. called of merger.. debacle

Folks.. SHORT SPRINT!!!!!!!!!!!!!!!!!!!!!!!!



adolphz's picture

This is same click bait since Dow was below 10,000    GIVE IT UP.



buzzsaw99's picture

what if i told you

it isn't a loss if you don't sell the fucking dip?

adolphz's picture

There is a crash coming that is not even a question.  The problem is none of the doom has worked out since 2009 except for the SUCKERS who believe it. 

buzzsaw99's picture

what if i told you

there is no market?

Ron_Mexico's picture

and what if I told you that there's only one electron in the whole universe? you couldn't disprove it . . .

illuminatus's picture

I can tell you who won't eat any losses.

buzzsaw99's picture

what if i told you

that crashes are buying opportunities?

JibjeResearch's picture

That is just business...  I thought everybody knew that....

Wilcox1's picture

If an 80yr old passes intestate, his assets flow to the most direct lineal heirs. Something wrong with that?

buzzsaw99's picture

This is no different than our 80-year-old refusing to draft a will because he simply can't face the reality that one day he'll need one...

what if i told you

nobody "needs" a will.  once you're dead you don't "need" anything.

dltff-ya's picture

does anybody have

  a chart of federal budge fractions for defense, entitlements, deressionary and  debt service. Actually need a sequence of these charts by year, and they must be backed by a credible  source.

Really after the rate of growth of percent of budget due to debt service.  thanks

Grandad Grumps's picture

There are no real losses when fiat mnoney is created out of thin air and used to buy assets. THe assets retain their value, if not price and the the fiat nevfer had a value in the first place, so there is nothing to lose!

Dragon HAwk's picture

I hate to say it, but at some point our Military is going to EAT a lot of Losses

RaoulDuke66's picture

Just print and give. It's only fiat. When the fiat fails, create a new and improved fiat. Rinse. Repeat.